In key news on Hong Kong stocks, China Vanke Co. Ltd. (HK:2202) said it is bracing up for huge losses in the first half of 2024 as China’s housing crisis continues to impact developers. The company expects to post a loss between ¥7 billion and ¥9 billion ($962.5 million and $1.24 billion). This loss range reflects significant deterioration compared to the net profit of ¥9.87 billion in the first half of 2023. Vanke attributed its losses primarily to high land acquisition costs and the discounts offered to clear housing inventory.
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Vanke’s shares were down 1.78% as of writing. Over the last three years, the stock has lost over 80% of its value due to the ongoing slump in China’s real estate market.
China Vanke is among the leading real estate developers in China and is focused on residential development.
China Vanke Navigating the Housing Crisis
China Vanke remains one of the few major developers in China that has managed to avoid default so far. The company had earlier stated that it aims to cut down its interest-bearing debt from approximately $44 billion to around $30 billion by the end of 2025. Additionally, the company has been raising funds and exploring asset sales to manage its liquidity crisis and address investor concerns.
Among the other players, real estate giant China Evergrande Group (HK:3333) was ordered to liquidate in January 2024 after it repeatedly failed to propose a viable plan to restructure its debts. Meanwhile, Country Garden Holdings Co. (HK:2007) could be the next in line for liquidation as it begins its legal battle to handle its mounting debts.
In terms of its first-half performance, Vanke generated sales of ¥127.30 billion and delivered 74,000 houses. Also, the company implemented a business reform and risk mitigation plan, to focus on its core operations.
China Vanke Stock Price Target
According to TipRanks consensus, 2202 stock has received a Hold rating based on one Hold recommendation from Jefferies. The China Vanke share price target is HK$4.76, which is 6% above the current trading level.
